Investments in Available-For-Sale Securities | 3 Months Ended |
Mar. 31, 2015 |
Investments, Debt and Equity Securities [Abstract] | |
Investments in Available-For-Sale Securities | NOTE 3—INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES |
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Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost basis of securities and their approximate fair values are as follows: |
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| | Amortized | | | Gross | | | Gross | | | | | | | | | | | | |
| | Cost | | | Unrealized | | | Unrealized | | | | | | | | | | | | |
| | Basis | | | Gains | | | Losses | | | Fair Value | | | | | | | | | |
| | (In Thousands) | | | | | | | | | |
March 31, 2015: (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and federal agency obligations | | $ | 4,997 | | | $ | 8 | | | $ | 18 | | | $ | 4,987 | | | | | | | | | |
Debt securities issued by states of the United States and political subdivisions of the states | | | 542 | | | | — | | | | 3 | | | | 539 | | | | | | | | | |
Corporate bonds and notes | | | 16,602 | | | | 52 | | | | 14 | | | | 16,640 | | | | | | | | | |
Preferred stock | | | 3,000 | | | | 34 | | | | 32 | | | | 3,002 | | | | | | | | | |
Mortgage-backed securities | | | 2,444 | | | | — | | | | 22 | | | | 2,422 | | | | | | | | | |
Marketable equity securities | | | 14,875 | | | | 2,698 | | | | 407 | | | | 17,166 | | | | | | | | | |
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| | $ | 42,460 | | | $ | 2,792 | | | $ | 496 | | | $ | 44,756 | | | | | | | | | |
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December 31, 2014: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and federal agency obligations | | $ | 4,007 | | | $ | 3 | | | $ | 20 | | | $ | 3,990 | | | | | | | | | |
Debt securities issued by states of the United States and political subdivisions of the states | | | 544 | | | | — | | | | 4 | | | | 540 | | | | | | | | | |
Corporate bonds and notes | | | 15,238 | | | | 38 | | | | 35 | | | | 15,241 | | | | | | | | | |
Preferred stock | | | 3,000 | | | | — | | | | 96 | | | | 2,904 | | | | | | | | | |
Mortgage-backed securities | | | 2,138 | | | | — | | | | 23 | | | | 2,115 | | | | | | | | | |
Marketable equity securities | | | 14,780 | | | | 2,641 | | | | 436 | | | | 16,985 | | | | | | | | | |
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| | $ | 39,707 | | | $ | 2,682 | | | $ | 614 | | | $ | 41,775 | | | | | | | | | |
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The scheduled maturities of debt securities were as follows as of the dates indicated: |
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| | Fair | | | | | | | | | | | | | | | | | | | | | |
| | Value | | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
March 31, 2015 (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
Due within one year | | $ | 6,772 | | | | | | | | | | | | | | | | | | | | | |
Due after one year through five years | | | 13,399 | | | | | | | | | | | | | | | | | | | | | |
Due after five years through ten years | | | 2,016 | | | | | | | | | | | | | | | | | | | | | |
Due after ten years | | | 1,022 | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | 2,422 | | | | | | | | | | | | | | | | | | | | | |
Asset-backed securities | | | 991 | | | | | | | | | | | | | | | | | | | | | |
Preferred stock, no stated maturity | | | 968 | | | | | | | | | | | | | | | | | | | | | |
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| | $ | 27,590 | | | | | | | | | | | | | | | | | | | | | |
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| | Fair | | | | | | | | | | | | | | | | | | | | | |
| | Value | | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Due within one year | | $ | 5,278 | | | | | | | | | | | | | | | | | | | | | |
Due after one year through five years | | | 12,990 | | | | | | | | | | | | | | | | | | | | | |
Due after five years through ten years | | | 1,491 | | | | | | | | | | | | | | | | | | | | | |
Due after ten years | | | 994 | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | 2,115 | | | | | | | | | | | | | | | | | | | | | |
Asset-backed securities | | | 1,011 | | | | | | | | | | | | | | | | | | | | | |
Preferred stock, no stated maturity | | | 911 | | | | | | | | | | | | | | | | | | | | | |
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| | $ | 24,790 | | | | | | | | | | | | | | | | | | | | | |
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There were no securities of issuers whose aggregate carrying amount exceeded 10% of stockholders’ equity as of March 31, 2015 (unaudited) and December 31, 2014. |
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During the three months ended March 31, 2015, proceeds from the sale of an available-for-sale security amounted to $1,034,000. The gross realized gain on the sale amounted to $1,000 and there were no gross realized losses. The tax expense applicable to the realized gain for the three months ended March 31, 2015 amounted to less than $1,000. During the three months ended March 31, 2014, there were no sales of available-for-sale securities. |
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The Company had no pledged securities as of March 31, 2015 (unaudited) and December 31, 2014. |
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The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, and are not other-than-temporarily impaired, are as follows: |
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| | Less than 12 months | | | 12 Months or Longer | | | Total | |
| | Fair | | | Unrealized | | | Fair | | | Unrealized | | | Fair | | | Unrealized | |
| | Value | | | Losses | | | Value | | | Losses | | | Value | | | Losses | |
| | (In Thousands) | |
March 31, 2015: (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and federal agency obligations | | $ | 1,490 | | | $ | 12 | | | $ | 1,495 | | | $ | 6 | | | $ | 2,985 | | | $ | 18 | |
Debt securities issued by states of the United States and political subdivisions of the states | | | 539 | | | | 3 | | | | — | | | | — | | | | 539 | | | | 3 | |
Corporate bonds and notes | | | 1,004 | | | | 5 | | | | 1,489 | | | | 9 | | | | 2,493 | | | | 14 | |
Preferred stock | | | — | | | | — | | | | 938 | | | | 32 | | | | 938 | | | | 32 | |
Mortgage-backed securities | | | 2,423 | | | | 22 | | | | — | | | | — | | | | 2,423 | | | | 22 | |
Marketable equity securities | | | — | | | | — | | | | 9,363 | | | | 407 | | | | 9,363 | | | | 407 | |
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Total temporarily impaired securities | | $ | 5,456 | | | $ | 42 | | | $ | 13,285 | | | $ | 454 | | | $ | 18,741 | | | $ | 496 | |
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December 31, 2014: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and federal agency obligations | | $ | 2,006 | | | $ | 6 | | | $ | 1,486 | | | $ | 14 | | | $ | 3,492 | | | $ | 20 | |
Debt securities issued by states of the United States and political subdivisions of the states | | | 540 | | | | 4 | | | | — | | | | — | | | | 540 | | | | 4 | |
Corporate bonds and notes | | | 4,978 | | | | 11 | | | | 1,974 | | | | 24 | | | | 6,952 | | | | 35 | |
Preferred stock | | | — | | | | — | | | | 2,904 | | | | 96 | | | | 2,904 | | | | 96 | |
Mortgage-backed securities | | | 2,115 | | | | 23 | | | | — | | | | — | | | | 2,115 | | | | 23 | |
Marketable equity securities | | | — | | | | — | | | | 10,306 | | | | 436 | | | | 10,306 | | | | 436 | |
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Total temporarily impaired securities | | $ | 9,639 | | | $ | 44 | | | $ | 16,670 | | | $ | 570 | | | $ | 26,309 | | | $ | 614 | |
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The Company conducts periodic reviews of investment securities with unrealized losses to evaluate whether the impairment is other-than-temporary. The Company’s review for impairment generally includes a determination of the cause, severity and duration of the impairment; and an analysis of both positive and negative evidence available. The Company also determines if it has the ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery to cost basis. Based on the Company’s review of securities in the investment portfolio, management deemed securities with unrealized losses as of March 31, 2015 (unaudited) and December 31, 2014 to be temporarily impaired and has the ability and intent to hold these securities until recovery to cost basis occurs. A summary of these reviews is as follows. |
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March 31, 2015 (unaudited) |
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Unrealized losses on U.S. Government and federal agency obligations amounted to $18,000 and consisted of four securities. Unrealized losses on corporate bonds and notes amounted to $14,000 and consisted of four securities. The unrealized losses on these debt securities were individually all less than 2.5% of amortized cost basis, and the unrealized losses were primarily due to changes in interest rates. In regard to corporate debt, the Company also considers the issuer’s current financial condition and its ability to make future scheduled interest and principal payments on a timely basis in assessing other-than-temporary impairment. |
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Unrealized losses on preferred stocks amounted to $32,000, or 3.2%, of amortized cost and consisted of one investment. This loss was due to changes in interest rates. The Company reviewed this investment for impairment by considering factors such as, among other things, the financial condition and ability of the issuer to continue to pay dividends, and any specific events that may affect the operations of the issuer. |
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Unrealized losses on marketable equity securities consist of six mutual funds. Four mutual funds invest mainly in short-term bonds, with unrealized losses amounting to $222,000, or 4.1% of cost basis, with individual losses ranging from 0.1% to 0.7% of the mutual fund’s cost basis; and two mutual funds invest in Government National Mortgage Association (GNMA) securities with a total combined unrealized loss of $185,000, or approximately 4.3% of each mutual fund’s cost basis. These six mutual funds have been in an unrealized loss position ranging from one to three years. The cause of the impairment in these mutual funds is due to changes in interest rates and the continued underperformance of most fixed income asset classes during the three months ended March 31, 2015 (unaudited). The Company considered several factors in reviewing these mutual fund investments, including underlying investment performance, composition and rating of the securities in the mutual fund, and management of the mutual funds’ issuer. |
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December 31, 2014 |
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Unrealized losses on U.S. Government and federal agency obligations amounted to $19,000 and consisted of four securities. Unrealized losses on corporate bonds and notes amounted to $35,000 and consisted of twelve securities. Unrealized losses on municipal bonds amounted to $4,000 and consisted of two securities. Unrealized losses on mortgage-backed and asset-backed securities amounted to $24,000 and consisted of three securities. The unrealized losses on all of these debt securities were each individually less than 2.0% of amortized cost basis, and the unrealized losses were primarily due to changes in interest rates. In regard to corporate debt, the Company also considers the issuer’s current financial condition and its ability to make future scheduled interest and principal payments on a timely basis in assessing other-than-temporary impairment. |
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The Company’s investments in preferred stocks were purchased in the first quarter of 2013, and consist of three investments with unrealized losses amounting to $96,000, or 3.2% of amortized cost. These three investments consist of Kayne Anderson MLP, which has an unrealized loss of $1,000, or 0.1 percent of amortized cost, General Electric Capital Corporation, which has an unrealized loss of $6,000, or 0.6% of amortized cost, and Public Storage Inc., which has an unrealized loss of $89,000, or 8.9% of amortized cost. These losses were due to changes in interest rates. The Company reviewed these investments for impairment by considering factors such as, among other things, the financial condition and ability of the issuer to continue to pay dividends, and any specific events that may affect the operations of the issuer. |
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Unrealized losses on marketable equity securities consist of seven mutual funds. Five mutual funds invest mainly in short-term bonds, with unrealized losses amounting to $238,000, or 3.7% of cost basis, with individual losses ranging from 0.8% to 8.4% of the mutual fund’s cost basis; and two mutual funds invest in GNMA securities with a total combined unrealized loss of $198,000, or approximately 4.6% of each mutual fund’s cost basis. These seven mutual funds have been in an unrealized loss position ranging from one to three years. The cause of the impairment in these mutual funds is due to changes in interest rates and the continued underperformance of most fixed income asset classes during the year ended December 31, 2014. The Company considered several factors in reviewing these mutual fund investments, including underlying investment performance, composition and rating of the securities in the mutual fund, and management of the mutual funds’ issuer. |
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